It's official: Boulder creates energy utility

City Council members excited over step officials called procedural

The Xcel Energy-owned Valmont Power Plant in Boulder, as seen from the air. The Boulder City Council voted Tuesday night to form a municipal utility, although officials say a decision has not yet been made to file for condemnation of Xcel's energy infrastructure in Boulder. The city would not seek to acquire the coal-powered Valmont plant. (Mark Leffingwell / Daily Camera)

For weeks, Boulder officials have downplayed the significance of the vote, as the utility will be a paper entity only for months and possibly for years to come.

They stressed that the creation of the utility does not mean that Boulder has decided to acquire Xcel Energy's distribution system or actually run a utility and that the city can and might change course.

But Boulder City Council members were jubilant over the decision, with Councilman Macon Cowles saying at the end of the meeting that he wished he'd brought champagne.

"The ones who are asking us to do this are envisioning a new world," he said before the vote. "If we want to wreck the natural systems, all we have to do is stick with the status quo. Most of the people in our town are saying we cannot keep doing this. We have to usher in a new era in the relationship with the natural world. This is a high calling that we are doing."

Councilwoman Lisa Morzel invoked future generations.

"We have children to think about," she said. "We have to separate from dirty fuels, which is what our current provider uses."

Of the three council members who voted against moving forward with municipalization last year, only George Karakehian is still on the council.

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He sounded a more cautious note, saying he was still concerned about costs — the costs of acquiring and running the utility and the costs of continuing to investigate the feasibility of the utility, which has exceeded the $1.9 million generated by the voter-approved utility occupation tax by about $300,000 the last two years and could cost more as legal costs escalate.

But he joined all eight of his colleagues in voting yes on utility formation.

"I believe this is a logical and necessary next step, whether we municipalize or use this as a tool to continue negotiations with Xcel," Karakehian said.

An attorney representing Xcel Energy read a letter into the record that called the vote "premature." The letter said Boulder has not shown that it can meet the charter requirements of acquiring the system at a price that will allow rates to be comparable to Xcel's rates and, in particular, that Boulder needs to work more with the Public Utilities Commission to determine how the commission will treat customers in unincorporated areas, mostly in Gunbarrel, who are served by substations Boulder wants to acquire. The PUC may try to block that acquisition, which would raise costs for Boulder and have an effect on rates.

Even the most pro-municipalization council members said they want to keep communication open with Xcel, but Councilman Sam Weaver said that if the company wants to bring forward renewable energy plans that might change Boulder's mind, that needs to happen very soon.

"The train is really leaving the station," he said. "It's not just tooting its whistle. It's starting to move. If Xcel is going to offer something that can be expanded to the rest of the state, now is the time."

Boulder is in negotiations with Xcel to acquire its Boulder distribution system, including six substations and a high-voltage line that rings the city. That is a necessary precursor to filing for condemnation of the system through eminent domain, a step that could come between now and September.

Officials said the utility needs to be created now so that it can issue bonds in a timely manner when the city reaches a settlement with Xcel or gets a ruling from a judge.

There were critics of the utility idea Tuesday.

Mark Gelband, a former council candidate and University of Colorado administrator who is a frequent critic of city policies, said he's no fan of Xcel but he worries the city won't be able to keep rates reasonable.

"Are there really other ways we can green our community short of buying a 19th-century distribution system?" he asked.

But Leslie Glustrom, an activist on energy issues, said Xcel's rates are more likely to go up at a faster rate because fossil fuels will get more expensive.

The revenue from a city utility can be used to invest in new generation and distribution technologies, she said.

After the unanimous vote, there was a burst of applause from the half-dozen municipalization supporters in the audience.

Boulder Mayor Matt Appelbaum, usually a stickler for decorum, did not shush them.

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